Thill’s Download: Hyperscalers Screen Positive + META Capacity Monetization Opp

Research evidence excerpt

Thill’s Download: Hyperscalers Screen Positive + META Capacity Monetization Opp

Software

Equity Research

July 3, 2026

PRGS F2Q Earnings Recap (Hold, $40 PT) - Progress

Report: Steady Marks, No Honors

What we liked: 1) Solid execution in F2Q. Revenue of $253M grew 7% y/y, while non-GAAP EPS of

$1.63 was well above the midpoint of the guide at $1.50. Growth was broad-based across OpenEdge,

LoadMaster, WhatsUp Gold, MOVEit, dev tools and ShareFile, with management also calling out

notable strength in DataDirect, Chef, MarkLogic and LoadMaster. Mgmt called out renewal timing on

subscription contracts as a meaningful positive one-time contributor in the quarter, which, combined

with healthy demand, drove very strong y/y growth, though ARR growth of 2% remains the cleaner

read on underlying momentum. 2) Capital allocation is becoming more balanced. The updated full-

year guide now reflects ~$220M of net debt repayment and ~$75M of share repurchases. We view

the faster buyback pace positively, particularly with the model generating cash, though the slightly

moderated pace of debt paydown is worth monitoring. PRGS repurchased $35M of shares in F2Q and

has $148M remaining under the current buyback program. 3) NRR ticked up modestly to 100%. The

move to 100% NRR is encouraging after several quarters where investors have focused on durability

of the installed base, cross-sell and retention.

What we're watching: 1) M&A drought continues. Mgmt commentary suggests the deal pipeline

remains active, with the company speaking to 50-60 targets every quarter. The notable change in

tone is that mgmt is becoming gradually more optimistic as sellers begin to adjust expectations,

which could eventually reopen the acquisition funnel, but timing remains uncertain. 2) F3Q guide